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Canadian dollar update – Thursday March 26, 2020. Greenback drops as $2 trillion might not be enough to save economy.

Canadian dollar update – Thursday March 26, 2020. Greenback drops as $2 trillion might not be enough to save economy.
Albert Edwards
by Albert Edwards on March 26, 2020


U.S. dollar highlights:

Economic reports were on the back burner for the past few weeks. That changes today. The weekly US Jobless Claims number is expected to soar, with the consensus guess predicting 1 million claims. The number shouldn’t be a surprise, given the number of recent lay-offs, but it will underscore the negative impact on the economy. Jobless claims will become the “new NFP,” a closely-watched market-moving data point, as it will be a weekly gauge of the health of the economy.

Canadian dollar highlights:

USD/CAD declined in lock-step with broad US dollar selling against the G-10 major currencies, getting a modicum of support from yesterday’s WTI oil price gains. The magnitude of the fiscal and monetary actions to help combat the economic impact of COVID-19, injected a bit of positive risk sentiment into markets.

Euro highlights:

EUR/USD continued to rebound from last week’s 1.0650 low and broke above 1.0900 in Asia, and hit 1.0950 in early New York trading. The single currency is getting an added boost from chatter about a European Union-backed corona-bond. Nine EU countries, including France, Italy and Spain, are calling for a new debt instrument to help ease the impact of the coronavirus. Germany is vehemently opposed to such an idea. Regardless, EUR/USD prices traded higher.

British pound highlights:

GBP/USD traded sideways in Asia and then rallied in Europe, with weak February Retail Sales data ignored (actual -0.3% m/m vs January’s upwardly revised 1.1%). The Bank of England left rates unchanged at 0.1%, content to wait and see the effect of their earlier actions. GBP/USD climbed from 1.1780 to 1.1960.

Asia Pacific highlights:

USD/JPY took it on the chin, plunging from 111.28 to 109.82 in early New York trading. Broad US dollar weakness and a drop in 10-year US Treasury yields from 0.872% to 0.795%, weighed on the currency pair.